Putting the state at the forefront of a national effort to help manage a retirement issue that concerns millions of Americans, Maryland passed legislation that will come into law on Friday to give employees with no retirement savings options state-sponsored and private alternatives.
The new bill will give employees who do not have a 401(k) plan an option to contribute to a retirement savings account.
The Brookings Institute reports that there are 52 percent of these employees in companies with 50 to 99 employees, and 80 percent of them in companies with less than 10 employees. In Maryland, there is an estimated million of them.
The Baltimore Sun explained:
“This is kind of trying to head off a crisis that we see coming,” said Del. C. William Frick, the Montgomery County Democrat who sponsored the bill in the House of Delegates. “It’s a big step forward and it’s going to be a national model.”
Proponents describe it as a minimally intrusive system under which the state will oversee but not manage a retirement plan for businesses. Employers are not required to contribute to the plan. They may use their existing automated payroll systems to make voluntary deductions on behalf of workers who choose to participate.
Opponents, which include the Maryland Chamber of Commerce and other business groups, see it as government overreach.
“It’s our position that it still puts government in the position of picking winners and losers,” said Mike O’Halloran, director of the National Federation of Independent Business in Maryland. “That’s something that should be left to the private sector.”
The law is set to be fully implemented in 2018.